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      MERGERS AND ACQUISITIONS UPDATES FROM BERKERY NOYES

    Thursday
    Jul202017

    INFRASTRUCTURE SOFTWARE DEAL VOLUME ON THE RISE

    Berkery Noyes' Software report for first half 2017 showed that M&A volume increased 12 percent on a half year basis. The number of acquisitions completed by strategic acquirers improved eight percent whereas private equity backed deal flow rose 25 percent. Aggregate transaction value declined 18 percent, from $93.02 billion to $76.63 billion. This followed a 41 percent gain in second half 2016.

    The median revenue multiple moved slightly from 2.5x in second half 2016 to 2.3x in first half 2017, while the median EBITDA multiple stayed the same at 13.3x. Over the last two-and-a-half years, deals in the $10-$20 million range received a median enterprise value multiple of 2.2x revenue, compared to 2.6x revenue for those in the $20-$80 million range and 3.9x revenue for those in the $80-$160 million range and above.

    Transaction volume in the Infrastructure Software segment increased 21 percent in first half 2017, making it the segment with the largest half year rise in volume. M&A activity in the segment remained almost constant throughout the four preceding half year periods. The largest Infrastructure deal year-to-date was Cisco Systems’ acquisition of AppDynamics, an application performance management and IT analytics company, for $3.9 billion.

    Cisco completed several other high profile Infrastructure transactions during first half 2017 with the announced acquisition of Viptela, a software-defined wide area network (SD-WAN) company, for $610 million; and MindMeld, an artificial intelligence (AI) startup that helps business build conversational interfaces, for $125 million.

    Additional notable Infrastructure deals thus far in 2017 included HGGC’s announced acquisition of IDERA, a provider of database lifecycle management solutions and application development tools, for $1.13 billion; HP Enterprise’s announced acquisition of SimpliVity, a data management platform focused on hyper-converged infrastructure technology, for $650 million; and CA Technologies’ acquisition of Veracode, a provider of cloud-based application intelligence and security verification services, for $614 million.

    In terms of software used within specific vertical industries or “Niche Software,” transaction volume experienced a 15 percent improvement. After remaining nearly constant in second half 2016, deal volume in the Consumer Software segment declined 14 percent. M&A activity in the Business Software segment, which consists of software designed for general business practices and not specific industry markets, saw a 13 percent rise relative to second half 2016.

    “There are many motivated acquirers competing for good properties in the software space,” added James Berkery, Managing Partner at Berkery Noyes. “Buyers are usually attracted to companies that can demonstrate a high growth rate, strong margins, good free cash flow, and a diversified customer base, among other factors. Although careful not to overpay, they are sometimes willing to stretch to a premium price when they have a valid, compelling and strategic reason to do so.”

    Friday
    May192017

    MOBILE APPLICATION M&A VOLUME REMAINS STRONG

    Berkery Noyes’ Online and Mobile report for Q1 2017 indicated that deal volume increased seven percent in over the past three months. Total transaction value declined 49 percent, from $38.9 billion to $19.9 billion. Both aggregate volume and value throughout the past five quarters reached their peak in Q2 2016. The number of transactions in the mobile application subsector improved ten percent on a quarterly basis, with a total of 116 acquisitions in Q1 2017.

    Notable mobile-based deals during the quarter included United Luck Consortium’s $1 billion acquisition of Outfit7, a media franchise with various mobile applications, which have received more than 5 billion downloads; Take-Two Interactive Software’s acquisition of Social Point, a mobile game developer, for $250 million; and ABRY Partners’ announced acquisition of MobileHelp, a provider of mobile medical alert and personal health management solutions, for $130 million.

    E-Marketing & Search volume improved nine percent in Q1 2017. Notable digital marketing deals in the segment year-to-date included Amobee’s acquisition of Turn, an advertising technology company used by marketers and agencies, for $310 million; Altice’s announced acquisition of Teads, an online video advertising company, for $306 million; and Accenture Interactive’s announced acquisition of a majority stake in SinnerSchrader, a digital marketing and advertising agency based in Germany, for $62 million.

    “Digital marketing solutions that are able to extract insights from the growing amounts of data and effectively engage consumers across multiple channels are highly valued in today’s market,” said Vineet Asthana, Managing Director at Berkery Noyes. “Technology companies, consulting firms, and others are eager to gain market share by seeking a larger array of service offerings to complement their existing product and solution portfolios, especially since enterprises are requiring an increasing amount of data management services.” Asthana continued, “Many large players, both financial and strategic, are actively pursuing inorganic growth through acquisition, as the marketing automation market is still rapidly expanding.”

    Monday
    May152017

    TRANSACTION ACTIVITY IN THE B2B INFORMATION SEGMENT UNDERGOING A SIGNIFICANT INCREASE

    According to Berkery Noyes’ Media and Marketing report for Q1 2017, industry deal volume underwent a two percent uptick over the past three months. Aggregate value fell from $145 billion to $15.8 billion.

    Of note, two of the industry’s top three highest value acquisitions last year occurred in Q4 2016. This included AT&T’s announced acquisition of Time Warner for $105.3 billion, or $85.4 billion if net debt is excluded. If the Time Warner deal is omitted, value decreased 59 percent, which was about the same decline in value when examined on a year-over-year basis.

    Total volume in the B2B Publishing and Information segment increased 33 percent in Q1 2017. This made it the sector with the largest rise in volume over the past three months. High profile B2B related deals in Q1 2017 included Gartner’s acquisition of CEB Global, a corporate research and advisory firm, for $3.3 billion; and Solera Holdings’ acquisition of Autodata Limited, which provides technical information to the automotive aftermarket, for $422 million.

    Other notable B2B transactions during the quarter were Vitruvian Partners’ acquisition of OAG Worldwide, a provider of flight status and scheduling information, for $215 million in a management buyout from AXIO Data Group; Zoopla Property Group’s acquisition of Hometrack, a provider of residential property market insights and analytics, for $152 million; and Dun & Bradstreet’s acquisition of Avention, a multi-channel platform that offers business information and sales enablement solutions, for $150 million.

    As for other select markets covered in the report, volume in the Internet Media segment increased 18 percent on a quarterly basis. Internet Media also nearly surpassed the Marketing segment as the industry’s most active sector in Q1 2017. The Exhibitions, Conferences and Seminars segment saw volume improve ten percent, which followed a 48 percent rise in Q4 2016. Deal activity in the Consumer Publishing segment fell 22 percent in Q1 2017 but remained about constant year-over-year.

    “Companies that offer events, subscription-based data offerings and/or marketing services, are likely achieving growth and are attractive to both strategic and private equity acquirers,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “New acquirers such as TBG AG, a Zurich-based family office that just announced the acquisition of DTN, the U.S. real-time weather service to the agricultural sector, enter to create a dynamic M&A market. Large strategics’ divestitures of non-core properties and private equity timely exiting portfolio companies, coupled with private company sellers, have fueled this sellers’ market.”

    Monday
    May012017

    SOFTWARE DEAL VOLUME AND VALUE BOTH ON THE RISE

    Berkery Noyes’ Software report for Q1 2017 showed that transaction volume experienced a 16 percent gain over the past three months, with a total of 528 acquisitions in Q1 2017. Overall value rose 75 percent, from $29.4 billion to $51.4 billion. The number of deals throughout the past five quarters reached its peak in Q2 2016, whereas value reached its zenith in Q3 2016.

    Deal volume in the “Niche Software” segment, which is targeted to specific vertical markets, increased 14 percent in Q1 2017. The Niche segment accounted for four of the overall industry’s top ten highest value deals year-to-date. The largest of these transactions was Intel’s announced acquisition of Mobileye, which develops self-driving technologies, for $14.7 billion. The Mobileye acquisition follows several related transactions in 2016 by high profile acquirers such as Uber, General Motors, and Ford.

    Other notable Niche segment deals year-to-date included Vista Equity Partners’ announced acquisition of DH Corporation, a provider of technology solutions to financial institutions, for $3.6 billion, which Vista plans to combine with its portfolio company Misys; McKesson Corporation’s announced acquisition of CoverMyMeds, which offers electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical manufacturers, for $900 million; and Hexagon’s announced acquisition of MSC Software, a provider of computer-aided engineering (CAE) solutions such as simulation software for manufacturing process development, for $834 million.

    The Business Software segment, which consists of software designed for general business practices and not specific industry markets, saw a 29 percent quarterly increase in volume. The Business segment’s highest value deal in Q1 2017 was Blackstone Group’s announced acquisition of Aon’s technology-enabled and human resources platform for $4.3 billion.

    Other notable Business segment deals year-to-date included Atlassian’s acquisition of Trello, a web-based collaboration software and project management service, for $425 million; and Wolters Kluwer Tax & Accounting’s announced acquisition of Tagetik, which provides corporate performance management solutions and services to mid and large sized corporations, for $317 million.

    “No matter the business the human capital element exists, thus acquirers across a wide spectrum are showing strong interest in workforce management, recruiting, training, performance reporting, compensation and other functions,” said Sameer Pal, Managing Director at Berkery Noyes. “Employers increasingly recognize there are enormous direct and indirect costs to turnover and addressing that spans the entire employee lifecycle. Technology enablement around the critical needs of finding, hiring, and retaining qualified personnel allows companies to deal with these areas holistically.” Pal continued, “Additionally, given the ongoing proclivity for organizations to distribute their work forces, continued outsourcing of functions and business processes, and the progress being made in supporting technology areas, knowledge management and collaboration platforms are becoming even more prolific.”

    Friday
    Mar312017

    JONATHAN KRIEGER TO SPEAK AT EDISON PARNTERS’ 2017 STRATEGIC GROWTH SUMMIT

    Jonathan Krieger, Managing Director in the Healthcare Investment Banking Group at Berkery Noyes, will be speaking at Edison Partners’ 2017 Strategic Growth Summit on April 6th in Philadelphia.

    The event is going to feature several roundtables composed of experts focused on specific industries: Enterprise 2.0, Financial Technology, Healthcare Information Technology, and Marketing Technology. Jonathan's presentation will focus on investing and M&A trends in the Healthcare Information Technology sector.

    More information can be found here.